Back to Buchanan? Explorations of welfare and subjectivism in behavioral economics

Malte Dold

No 2017-03, Discussion Paper Series from University of Freiburg, Wilfried Guth Endowed Chair for Constitutional Political Economy and Competition Policy

Abstract: In light of behavioral findings regarding inconsistent individual decision-making, economists have begun to re-conceptualize the notion of welfare. One prominent account is the preference purification approach (PP), which attempts to reconstruct preferences from revealed choices based on a normative understanding of neoclassical rationality. Using Buchanan's notion of creative choice, this paper criticizes PP's epistemic, ontological, and psychological assumptions. It identifies PP as a static position that assumes the satisfaction of given 'true preferences' as the normative standard for welfare. However, following Buchanan, choice should be understood dynamically as a process whereby preferences constantly regenerate. Accordingly, the meaning of welfare emerges from an ongoing quest for individual self-constitution. If this holds true, then rationality axioms cannot serve as a priori normative standards. Instead, creative imagination and learning processes must re-main central to any understanding of welfare in economics.

Keywords: Behavioral Welfare Economics; Creative Choice; James M. Buchanan; Rationality; Methodology; Subjectivism (search for similar items in EconPapers)
JEL-codes: B41 D03 P46 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-hpe, nep-mic and nep-upt
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Journal Article: Back to Buchanan? Explorations of welfare and subjectivism in behavioral economics (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wgspdp:201703

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